• Malakoff Corporation announced that it is involved in an arbitration case with GE Energy Parts Inc, GE Power Systems Sdn Bhd, General Electric International and General Electric Company.

• The case is being heard at the Singapore International Arbitration Centre.

• The arbitration is in respect of a gas turbine damage at 350MW Prai power plant in 2015. Due to the damage to the gas turbine at Prai power plant, Malakoff had claimed for insurance from Allianz General Insurance (Malaysia).

• Allianz reimbursed Malakoff a sum of RM72.1mil in full. Subsequently, Allianz filed a claim against GE and now, GE is filing a case back against Malakoff.

• GE is claiming that the damage to the gas turbine was an operational issue and not a design problem.

• Malakoff said that it is in the process of seeking legal advice and preparing its response to GE’s claims.

• We think that it would take time for the arbitration case to be resolved. In the meantime, we believe that Malakoff would not be recording any impairment or provision in respect of the case.

• We are keeping our BUY recommendation on Malakoff with an unchanged fair value of RM1.00/share.

Source: AmInvest Research - 14 Aug 2019